The timing of Schroeder’s announcement to make 200 staff redundant is quite simply cruel. The business has done an excellent job of migrating wealth customers worth some £26bn to the Schroders platform. All of those customers transferred because of their existing relationships with Schroders staff. Now that important work is complete, Schroeder’s senior management, who have been in the business for all of 5 minutes, decide to get rid of lots of the very staff that made the migration possible. If that’s not a proverbial kick in the teeth, then we don’t know what is. What should be worrying for Schroders, and Lloyds, is that lots of those ‘new’ customers will follow the staff that are being unceremoniously kicked out of the business. And who would blame them.
A few months ago Lloyds said it intended to present its wealth management ambitions, as part of its wider strategic review, which would be announced in early 2021. The clear intention is to build on its joint private client venture with Schroders Personal Wealth. With record low interest rates set to continue, increasing fee-based income is seen as a clear priority for Lloyds. The bank said: “it’s moving away from dependency on net interest margins. There is a desire on the part of the Board to look at more fee-based products and income which gives us more stability and moves away from dependence on the balance sheet”.
Despite the fact that wealth management is going to be one of the future growth areas, Schroders has announced swinging cuts to its business. And that at a time when it’s been recruiting staff across the business over the last few months. Instead of asking for volunteers, Schroders had already chosen the 200 staff it wanted to be made redundant before the announcement was made. A number of roles, like Client Directors for example, have been removed altogether, whilst some groups of staff, like PDAs, have been selected for redundancy. The evidence we have seen so far from members would seem to indicate that Schroders has not been able to explain how staff were selected for redundancy. The final decisions were made by the Regional Directors, but no details of the selection process have been provided to the staff being made redundant. How were those decisions made? What objective criteria were used by Regional Directors to make those decisions? Why was one PDA made redundant but another offered a role in the new structure?
What’s also worrying is that the two in-house staff unions – Accord and Unite – have agreed to these 200 redundancies without knowing any details of the selection process.
The fear for those remaining, especially with the front-book and back-book being split, is that life is going to get more difficult and there will be increasing pressure to achieve demanding business targets. We hope that it doesn’t go full circle to the bad old days, but Schroeder’s is sending a clear signal that life is going to be more uncomfortable for those staff that remain in the business. We will cover this in more detail in our next Newsletter.
In the meantime, members with any questions or comments on the latest proposals should contact the Union’s Advice Team immediately on 01234 262868.
The first stage of calculating entitlement involves working out an individual’s weekly earnings upon which Redundancy Payments would be based. The total pay figure is then divided by 52 to arrive at a weekly figure.
The formula for calculating Pre 2012 Severance Pay is 2 weeks’ pay for every year of service under age 22, 4 weeks’ pay for ever year of service aged 22 to 40, 6 weeks’ pay for every year of service aged 41 and over. Only the last 20 years service is used in the calculation and payment is capped at a maximum of 104 weeks’ pay.
The first £30,000 of any Redundancy Payment is paid tax-free. Severance payments apply to all staff. Payment is based on each individual’s length of service in the Bank, up to the date of termination rounded up to whole years based on age at last birthday. For example, service of 12 years 1 month at date of leaving would be rounded up to 13 years.
For those staff who joined the Bank after 1st January 2012 the severance terms are calculated differently. For each year of service under the age of 22 staff get 1.375 weeks’ pay per year of service. Between the ages of 22-40 staff get 2.75 weeks’ pay per year of service and 4.125 weeks’ pay per year of service over the age of 41. Service is rounded down to the nearest whole number of years and takes account of age as at the last birthday.
The total value of any payment under these terms is capped at £165,000.